How do you build credit when you've never had credit before? Believe it or not, no credit is better than bad credit and a lot of the time it's easier to build as well.
Fortunately, these days there's many different ways to start building credit when you've never had any credit before.
1. Secured credit cards. Almost all banks and credit unions offer some type of secured credit card. What is a secured credit card? It's a credit card secured by your own money instead of the banks money. For example: for a $500 secured credit card, you give the bank $500 and they lock it in your savings and then give you a credit card that you can use just like a normal credit card but with a $500 credit limit.
This option is available because it's less risky for lenders but also less risky for you (the consumer). It gives you a good opportunity to learn how to use a credit card responsibly and show lenders you can too. After using this card responsibly for about 1 year, you can apply for a standard credit card and remove the hold from your savings.
2. Secured loans. Very similar to credit cards but you don't get a credit card. Instead you get a loan and pay it back over a year with small monthly payments. This shows consistent repayment which ultimately can lead to building your credit.
3. Co signers. You can have anyone you trust to be added onto a credit application. This can help you qualify because both credit scores are looked at. You want to make sure someone who is going to be a co applicant has good credit, doesnt have a lot of debt, is someone you trust and understands they are also fully responsible for the credit/loan product.
Additional things before you apply for credit:
•Make sure you have income! You want to be able to show you can repay any money you use. Savings accounts with money is not usually enough to get you approved for credit products.
•Don't apply for multiple cards at once.
•Do your research first or go to your bank to talk to someone you can trust so you can get all the information you need before applying!
Questions? Comment below or send me a DM!